Microsoft’s Foodservice Innovation Outlook

With economic factors such as the sub-prime mortgage crisis, rising gas costs and inflating food prices, all putting pressures on disposable spending, the race for a bigger slice of the consumer spending pie has become more challenging than ever. Nearly 1 million U.S. restaurant and foodservice locations are facing fiercer competition each day from both inside and outside of their industry. In addition to staying on top of consumers escalating expectations for service, quality and trendy menus, foodservice operators must also grapple with a wide range of issues from food safety and wellness to payment card industry compliance and government regulations.

Despite all of these factors — and studies showing that 60 percent of new restaurants close within three years of opening1 — it is possible to survive and thrive in this dynamic industry. Indeed, the National Restaurant Association forecasted that 2007 would represent the restaurant industry’s 16th consecutive year of real growth, with sales expected to reach a record US$537 billion2. Industry experts believe that the restaurants best positioned to harness that growth will be the ones that empower their people with the latest technologies proven to elevate the guest experience, while increasing productivity and profits.

PressPass interviewed Tom Litchford, industry solutions director for Microsoft’s U.S. Retail and Hospitality Group, for Microsoft’s view on the foodservice industry and the role that innovation can play in driving profitable growth. Litchford leads Microsoft’s sales and services efforts for the foodservice segment, with the goal of helping to solve customers’ business problems through industry-relevant solutions and technology.

PressPass:How have consumer demands and industry trends raised the stakes for restaurants and foodservice operators?

Litchford: The concept that the consumer is king is as strong as ever in the restaurant industry. With such wildly popular television shows on the Food Network as “Iron Chef” and "Emeril Live,” consumers’ awareness in diverse ingredients and better quality, fresher-tasting foods is expanding. Restaurants are scrambling to meet demand for healthier and trendier options including locally grown and organic produce. Today’s digital consumers are also more informed and want to be entertained, expecting restaurants to keep pace.

As restaurants compete amongst themselves for consumer “stomach share,” they also must face heightened competition from outside their industry. Grocers are moving beyond the deli counter in their bids for the quick-service market, increasingly stocking a new wave of take-away offerings that enable consumers to quickly and conveniently create their own meals at home by combining pre-packaged and pre-cooked components.

On top of mounting competition, the restaurant industry is addressing complexities related to payment, food safety and brand protection. The Payment Card Industry Data Security (PCI DSS) compliance rules and Hazard Analysis Critical Control Points (HACCP) are just two initiatives with which the industry must contend. And if all this isn’t enough, expectations for environmental sustainability are also intensifying operational pressures.

With all of these demands, foodservice operators must adopt business processes and technology solutions that seamlessly deliver back-office performance while empowering the people—employees, suppliers, consultants, partners, and of course, customers—who enable them to succeed.

PressPass:How can restaurants and foodservice operators utilize technology innovations to empower their customers?

Litchford: As we predicted four years ago, mobile devices are changing the way that restaurants operate and serve today’s digital consumers. As proof, the 2007 Restaurant Industry Forecast by the National Restaurant Association showed that “46 percent of Americans say they are likely to use customer-activated ordering and payment terminals if available in their favorite table service restaurant. Younger consumers are more likely to do so, as 71 percent of 18- to 24-year-olds, and 64 percent of 25- to 34-year-olds say they would. About half of all adults – and two-thirds of those aged 18 to 34 – say they would use a self-serve order and payment terminal at a quick-service restaurant if it was available.”(3)

With these findings, it is no wonder that we are seeing an emergence of disruptive technologies that enable restaurants to address their guests’ expectations for using technology while also driving sales. Innovations that expedite table requests, support pre-ordering meals and deliver extended nutritional information are available today on Microsoft software and are accessible to consumers via their Windows Mobile device, Tablet PCs, the Web or a kiosk.

Another emerging opportunity that restaurants are starting to adopt to better connect with consumers is mobile marketing. Restaurants can even extend at home services for their customers by enabling them, for example, to place a delivery order from their gaming console or through a PC-based video game.

PressPass: What other innovative technologies can empower consumers and improve their overall dining experience?

Litchford: In addition to improving service, we expect the industry to adopt advanced technologies that improve the total experience for consumers by enabling them to access and interact with information or entertainment through natural voice and gestures.

One example is our Microsoft Surface technology, the first in a new category of Microsoft surface computing products that break down traditional barriers between people and technology. In the future, foodservice operators will be able to utilize Surface to turn an ordinary tabletop into a vibrant, dynamic experience for guests to interact with all forms of digital content through natural gestures, touch and physical objects, such as virtual menus, nutritional information, wine pairing suggestions and even their bill.

Another example of empowerment is technologies that enable location-based services such as maps, driving directions, and proximity searches. These solutions can be integrated into existing and new business applications to deliver better information to consumers and staff in a more-timely manner.

PressPass: We talked about how technologies can empower and entertain customers; how important is it for restaurants to use innovations to empower their employees?

Litchford: It’s critical. Whether the restaurant employee is the owner, manager, chef or server, they are the ultimate drivers of success. They have a direct impact on the guest experience and, ultimately, on the organization’s revenue and operations.

We believe that employee success is reliant on being better connected to real-time information and systems – day in and day out. By gaining a deeper understanding of their processes and their customers, they can adopt innovative solutions to turn their insights into action – this has a direct impact on operational efficiencies and customer service.

PressPass: What is the hottest trend for empowering and connecting restaurant employees?

Litchford: A technology trend that is getting a lot of attention for the return on investment it delivers is real-time alerting across a foodservice operation. Today’s solutions can monitor business activity views from multiple application systems and provide alerts at the store, region or corporate level via dashboards and mobile devices.

We are seeing restaurants use this type of technology to monitor entire facilities and provide alerts if a hard disk drive is failing or a printer is out of ink. Managers can be alerted to fraudulent activities such as a break-in or potentially fraudulent activity such as a back door left open. Let’s say a freezer has been left open for more than 60 seconds; a message can be sent to the restaurant manager alerting him or her to the problem. Restaurants can also monitor key performance indicators such as drive through wait-times to ensure the optimal level of service, especially at peak times.

In addition to real-time alerts, business intelligence solutions are giving food service operators the necessary tools to analyze and collaborate on performance and operational data in real-time to improve efficiency and lower costs. These solutions are designed to address a variety of issues from labor utilization to inventory. One example is waste reduction which enables managers to make better informed decisions about food levels needed to meet real-time fluctuations in demand.

PressPass: How are foodservice operations using technology beyond the restaurant to better improve operations?

Litchford: The same technology solutions that simplify people’s workdays can improve communications and processes across the entire operational chain and build valuable business connections with partners and suppliers. Solutions that enable a flexible technology infrastructure and support Web services, such as the Microsoft .NET Framework, can help restaurant operators connect more easily with their business partners while maximizing their valuable business data.

At Microsoft, we can reduce the complexity of IT integration and optimize a foodservice operator’s infrastructure to manage scattered locations and franchises and extend supply chain visibility. An advanced IT infrastructure has become even more important to ease the adoption of new and future technologies to help improve operations, such as radio-frequency identification (RFID). While RFID sounds futuristic, it’s being used today by such customers as Blue C Sushi to better track their goods and assets for improved quality assurance, cleanliness and food-safety measures.

PressPass:With so many new technologies available on the market, where is the best place to start?

Litchford: There has never been a better time for the restaurant industry to embrace all of the exciting new technologies that are available on the market. Whether they want to offer a more rewarding experience for their guests to drive sales or better control labor and food costs to improve margins, the right technology solution can lead the way.

That’s why we are encouraging our food service customers – from casual dining chains with thousand of restaurants to fine dining establishments with just a few sites – to imagine the possibilities. Tell us your long-term strategic view and we’ll help you to put in place the right IT infrastructure to make that vision a reality. Along with a whole cadre of certified Microsoft business partners dedicated to the foodservice industry, we can help guide foodservice operators through the maze of technology opportunities from what’s available now to what’s emerging. Microsoft is here to help restaurants rise above competitive pressures and industry regulations to create a flawlessly-performing operation -- one that consistently delivers a differentiated guest experience while empowering employees to make every square foot of space as profitable and productive as possible.

Sources:

(1) Business Week, Special Report: The Restaurant-Failure Myth, April 16, 2007.